NYC Office Market Falters

Bloomberg Reports:

Downtown Manhattan, where demand for office space began to surge three years after the 9/11 terrorist attacks, is about to lose its spot as the best- performing U.S. market.
Vacancies may exceed 14 percent of the area’s 87 million square feet by late 2011, empty space that’s equivalent to four Empire State Buildings and the highest rate since 1997

obviously this is all Goldman's fault - who else?

Goldman Sachs announced plans after 9/11 to move equity trading and research employees to Jersey City, New Jersey... and
...Goldman Sachs’s move to 200 West St. The company will leave behind about 2 million square feet at downtown buildings including 85 Broad St. and 1 New York Plaza.

Chicago Office Vacancy @ 4-Year peak

From Crain's

The noteworthy office spaces that came on the market include:

• 161,000 square feet at 540 W. Madison St., according to a spokeswoman for Bank of America Corp., which owns the building. In late ’08, North Carolina-based BofA leased 125,000 square feet to DRW Trading LLC, the first outside tenant in the building.
• 80,000 square feet at 200 S. Wacker Drive formerly occupied by Boston Consulting Group, which moved to 300 N. LaSalle St., developed last year by Hines Interests L.P.
• 75,000 square feet at 350 N. Clark St., a terra cotta classic where Mesirow Financial was based until it moved to 353 N. Clark St., which the Chicago-based investment firm co-developed last year.

As the building boom winds down, the vacancy rate for Class A space in newer, top-quality office building rose to 14.4% during the first quarter, compared to 12.5% during the fourth quarter and 9.5% during the first quarter of 2009.

Thanks in part to the expansion of 300 E. Randolph, the vacancy rate in the East Loop is the highest in the city, at 17.8%, compared to 14.7% during the fourth quarter and 11.9% during the first quarter of 2009.

The vacancy rate in the West Loop shot up to 15.8% during the first quarter, compared to 14.9% during the fourth quarter and 12.1% during first-quarter 2009.

Vacancies are lowest in River North, where the rate rose to 11.4%, compared to 10.3% during the fourth quarter and 11.3% during the first quarter of 2009.

Less Slow

Things got less slow the while I was out of town, but bid lists remain extremely sluggish.

PPIP details released as-advertised. Will include AJs and AMs.

REIS reported MF vacancies at a 22-year high.

Deutsche sold it's last Macklowe legacy asset for $330 (something) a square foot last week.

Deal Junkie highlighted an interesting article on co-tenancy - nothing new here, but just interesting.

Deal Junkie also highlighted an article where Cadwalader is asking lawyers to take a year off ... My favorite yard-hat is the one with Cadwalader on the front, because whichever neighbor walks up to me just keeps staring up at the name trying to figure it out.

Congress just got an earful about the horrible state of CRE from all sorts of folks, including Street analysts. All is lost.

June Retail sales were negative. Retail vacancies hit 10%! BUT Office vacancies win with a 15.9% vacancy rate.

In Miami Florida at the "Big House", Maison Grande filed for bankruptcy. They are a Condo Association (COA).

Duh, RevPAR is down.

Fear not, I'm not switching to a linkfest form, just been away - we'll try to say something more meaningful in the coming days. Spreads rallied today behind all this gleeful news (see, there!).

Office Vacancies15.2%

Office Vacancies are up 70 bps to 15.2% according to the REIS' data.

It's going to get much worse than that. I expect it to exceed 20% by year-end.

Don't read the WSJ article about this, btw, LingLing muddles fact and fiction. The headline is accurate though, and their graph is very nice (see right).